Monday, February 7, 2011

"Starve the Beast"

Bruce Bartlett
In 1976, Bartlett changed careers, going to work for Congressman Ron Paul...
In January 1977, Bartlett went to work for Congressman Jack Kemp...
In late 1984, Bartlett became vice president of Polyconomics, a New Jersey-based consulting company founded by Jude Wanniski...
In 1987, Bartlett became a senior policy analyst in the White House Office of Policy Development...
In his "Starve the Beast" PDF (2007), Bruce Bartlett writes:
The earliest reference I have seen to the phrase starve the beast appeared in a Washington Post article one hundred years ago. The author, Charles Edward Barnes (1907), used it literally to refer to intentionally starving an animal. [p.5]

The oldest expression I have found of the notion that tax cuts will hold down government spending comes from economist John Kenneth Galbraith. [p.6]

The earliest recent use I have seen of the precise term starve the beast as it relates to the budget appeared in a Wall Street Journal news story in 1985. [p.6]


Richard Nixon, Eisenhower’s vice president, continued this policy of resisting tax cuts and supporting tax increases after his election as president in 1968. One of his earliest actions in 1969 was to ask Congress for extension of the 1968 surtax... [p.7]

Gerald Ford, after succeeding Nixon in 1974, similarly resisted political pressure to cut taxes permanently... [p.7]

In an influential article in early 1976, Wall Street Journal editorial writer Jude Wanniski blasted Ford for timidity in cutting taxes. He argued that the nation needed each political party to be a different type of Santa Claus—the Democrats being the spending Santa Claus and the Republicans being the tax-cutting Santa Claus. [p.7]

After Ford’s defeat, Republicans in Congress and in the states began to experiment with tax cuts as a way of reviving both the economy and their political fortunes. In 1977, Congressman Jack Kemp (R-N.Y.) and Senator Bill Roth (R-Del.) introduced the Kemp-Roth tax bill, which would have cut statutory tax rates by approximately 30 percent across the board without corresponding spending cuts. In 1978, voters in California enacted Proposition 13, which cut and capped property tax rates, leading to further tax-reduction efforts in other states and giving rise to a national tax revolt. [p.8]

The political popularity of these two measures encouraged a reconsideration of the balanced-budget orthodoxy among conservative intellectuals. They found the starve-the-beast idea to be a way in which they could support tax cuts without abandoning a commitment to fiscal responsibility. [p.8]

Writing on the Wall Street Journal’s editorial page, which often sets the Republican agenda on economic policy, columnist Irving Kristol made clear the political connection between tax cuts and government spending. Tax cuts, he explained, are essential to shrinking the size of government. [p.9]

At this point, the circle had been largely squared. Instead of being viewed as the height of fiscal irresponsibility, cutting taxes without any corresponding effort to cut spending was now seen as the epitome of conservative fiscal policy. [p.9]

The political popularity of tax cuts would also help to elect more members of Congress with a desire to shrink government. [p.9]

In the 1980s, public-choice theory developed the idea that a conservative government might intentionally increase the national debt through tax cuts in order to bind the hands of a subsequent liberal government... More of the budget would have to be used for interest payments, thereby precluding a liberal government from spending as much as it would like on consumption. [pp.10-11]


Although the starve-the-beast theory still has adherents, even among reputable economists, the growth of spending and deficits even in the face of large tax cuts has worn down at least some of its former supporters. There is now a growing fear among such people that the ultimate result of relying on starving the beast to support tax cuts may be to make future tax increases inevitable. [p.20]

Perhaps a future fiscal crisis will provide political cover for massive cuts in entitlement programs that would be politically impossible except in such dire circumstances. [p.20]

A truly remarkable story, without a lick of economics in it.

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